Manufacturing investment group Melrose struck its first deal in four years today after agreeing to buy German utility-meter maker Elster Group for $2.3 billion (£1.5 billion).

Melrose, which buys manufacturing firms it feels are underperforming and tries to turn them round and sell them, said the bulk of the cash to pay for the deal will come from a fully underwritten £1.2 billion rights issue. “Elster is a high-quality business with strong end-markets and the potential for significant development and improvement under Melrose management,” chief executive Simon Peckham said.

Melrose seemed confident that it would secure the deal, saying it already had the backing of 64% of Elster shareholders. The tender is expected to start early next month.